Brexit caution from Labour’s Rachel Reeves regrettable

First things first, the shadow chancellor is certainly right to highlight a need to “restore” this reputation.

This reputation has surely been tarnished under the Conservatives.

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Ms Reeves’ declaration in Davos of Labour’s ambition to “unlock investment” was commendable enough. And she highlighted Labour’s intention to create a “national wealth fund” to invest alongside businesses.

However, beyond that, all we had really was soundbites and spin, coupled with extreme defensiveness over the elephant in the room, Brexit.

The Conservatives’ hard and shambolic Brexit surely stands out as the thing which has hammered the UK’s reputation on the global stage.

There was also, of course, the chaotic mini-Budget from erstwhile chancellor Kwasi Kwarteng in autumn 2022 during Liz Truss’s very short time in charge.

However, while this was a calamitous episode with lasting consequences, the scale of the permanent damage from it is much less than the cost of Brexit, which is very much ongoing.

The Brexit cost arises from the loss of frictionless trade, which has hampered exporters hugely and caused headaches for importers, and the ending of free movement of people, which has fuelled skills and labour shortages dramatically.

Labour seems to remain scared of its own shadow when it comes to Brexit.

More than that, the party offers little hope that it is going to do anything to mitigate the costs in a serious way.

Labour leader Sir Keir Starmer was impressive in late 2019 as he argued against Brexit.

He has since embraced the UK’s departure from the European Union, not in a half-hearted way but very enthusiastically indeed.

Ms Reeves, in an interview with Bloomberg on Wednesday in which she detailed what she was doing in Davos, highlighted her party’s desire to get its message across to big global investors and businesses.

She declared: “Under Keir Starmer’s leadership the Labour Party has changed.”

As observed previously, Sir Keir himself has changed, certainly in terms of his attitude to Brexit and his U-turn on his previous commitment to free university tuition south of the Border.

Returning to Ms Reeves, she highlighted Labour’s ambition to “deepen and strengthen the relationships between Labour and business to show that it is Labour that are the pro-business and the pro wealth creation party in Britain today”.

Labour might be helped in this regard, it is worth observing, by the abysmal performance of the Conservatives on the business and economic front over so many years now.

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However, pressed by Bloomberg on what question Labour was asked most by investors and specifically on whether it was about closer ties with the EU or something else, Ms Reeves responded very swiftly: “Number one thing is stability and consistency - a clear mission for an incoming government that they can get behind and then sticking with that plan rather than the chopping and changing, the chaos and the confusion that frankly too many businesses have had to get used to under Conservative governments these last 14 years.”

She seemed keen to dispel any notion that the main question might be around European ties.

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That said, Ms Reeves did flag specific things which came up, offering as examples the national wealth fund to invest alongside businesses, skills and “closer trading relationships, including with our neighbours in Europe”.

Asked what she told those who asked if Labour would have closer relations with Europe than the current government, the response seemed once again to be monumentally defensive.

Ms Reeves replied: “We accept the result of the referendum, which is almost eight years ago now. Britain is outside the European Union, the single market, the customs union, and free movement, and those things won’t change under a Labour government. But we don’t think that the deal that the Conservatives secured was the best deal available and we would build on that deal, working with our neighbours and trading partners in Europe, to strengthen it in key areas including for professional services, which were frankly sold down the river in those Brexit negotiations. We are working with business to establish the priorities for those negotiations.”

It was surely a most unimpressive answer.

The “build on that deal” from Ms Reeves rather said it all, and reinforced the notion of a dismal lack of clear blue water between Labour and the Conservatives on Brexit.

The Tory hard Brexit deal has been, and will continue to be, extremely damaging to the UK economy.

Tweaks around professional services, while they may be important for those sectors, would amount to a hill of beans in the context of the Brexit damage.

Labour’s defensiveness evokes memories of the Scottish national team’s four-six-zero formation against the Czech Republic in Prague in October 2010, under Craig Levein, in the Euro 2012 qualifiers.

Scotland paid the price for that ridiculous defensiveness.

It is worth noting that the Tories currently look more toothless than the Czech Republic, who ran out 1-0 winners that night in Prague.

However, that does not make Labour’s extreme lack of courage any more acceptable.

Ms Reeves, like Sir Keir, seems terrified to do anything that might annoy the Brexit brigade.

Political considerations are clearly to the fore, given recent voting patterns in places such as the north of England.

It is a bizarre state of affairs though.

Rejoining the single market would be a very easy and quick win for Labour if it is, as it claims, serious about improving living standards.

However, Sir Keir, Ms Reeves and co. seem to have decided that such a move could stand in the way of Labour regaining power.

Hence we have the categoric declaration from Ms Reeves that “Britain is outside the European Union, the single market, the customs union, and free movement” and that none of that will change under a Labour government.

The comment about respecting the result of the referendum is interesting.

The referendum asked about membership of the EU. There was no question about whether or not Brexit should involve staying in or leaving the single market and customs union.

It was the Tories who decided that Brexit must involve the type of scorched earth approach they have taken.

And Labour seems depressingly happy to tag along with that. What a pity.